3. A mail order magazine service has the exclusive subscription rights to a certain magazine. Subscriptions can be reserved for one, three, four or five years. A study of the subscriber list for other similar magazines reveals that the following information regarding the probabilities of subscription length would be appropriate: there is three times as many one year subscribers as five year subscribers and the number of three year and four year subscribers are each 10 % of the total.
The mail order service company receives a fee of $3.00 for a one year subscription and another $1.00 for each additional year.